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EMD: Tracking the burning questions

Railway tracks lead into the former Electro-Motive Diesel plant on Oxford St. in London this week. Workers were locked out of the plant on the first day of 2012, with the plant ultimately being closed by owner Caterpillar Inc., costing hundreds of Londoners their jobs. (CRAIG GLOVER The London Free Press )

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Free Press journalists Scott Taylor and Craig Glover covered the EMD standoff, including the plant shutdown that hit while they were in Indiana to chronicle the fallout of the controversy in Muncie, a city where much of the London work was towed at lower cost.

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It was a lousy way to start a new year. On Jan. 1, 2012, U.S. heavy equipment giant Caterpillar Inc., through its Progress Rail Services subsidiary, locked out nearly 500 ­unionized ­workers at London’s venerable Electro-Motive Diesel plant after a take-it-or-leave-it contract offer that would have cut wages by up to 50%. It was a move that drew international attention, even scorn. Just 34 days later, the company pulled the plug on the locomotive-building factory, throwing hundreds of people out of work and ending six decades of to-die-for blue-collar jobs in London. The lockout and the abrupt closing became a national flashpoint for fears about a race to the bottom on industrial wages, with many white-collar workers joining in rallies and other shows of support for the locked-out workers. Nearly a year removed from the drama, big questions persist about the fallout for workers — in London and elsewhere — and for the city itself. Was the local economy scarred long-term, or was it a mere flesh wound, quickly forgotten as other news filled its void? Is there any evidence other big employers, emboldened by Cat’s move, have embarked on similar wage-gutting? Looking back, we examine the aftermath.

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Q: The EMD standoff raised fears other big employers in Canada, emboldened by Caterpillar’s move, might try to slash wages or move production to lower-cost centres. Is there any evidence that’s happening?

“Absolutely not,” said Tim Carrie, president of the Canadian Auto Workers union Local 27, which represented the EMD workers. “Caterpillar is one of the most anti-union employers I’ve ever faced in my life. Some of the other employers may not like us being there, but they find a way to work with us.”

Still, at least two U.S. Midwest states — one of them, Indiana, key to the EMD story — have adopted so-called right-to-work laws that significantly weaken unions. Indiana’s move came on the heels of the EMD standoff, and likely contributed to Caterpillar moving London work there. And just this month, General Motors announced plans to move Camaro production from Oshawa to Michigan, the birthplace of the United Auto Workers which has adopted a similar right-to-work law.

Q: In hindsight, is there anything governments here — the city, the province or Ottawa — could have done to head off Caterpillar’s pull-out from London, or was the place doomed no matter what because of its higher wage structure?

Most observers, casual and expert alike, believe the plant was doomed from the moment the workers turned down the contract offer that would’ve slashed their wages. The federal government already had lent a helping hand in 2010 by offering favourable tax breaks to buyers of the company’s locomotives. Still, the feds and the provincial Liberals played a spirited blame game throughout the ordeal.

Q: It was the wage-slashing aspect of the EMD standoff that drew support for the workers from many people beyond unions, fearful that if blue-collar wages could be gutted, so could their own. What’s become of the informal network that popped up to support EMD workers?

Hard to say. Though the union claimed Caterpillar — and big business in general — had declared war on workers, contracts between unions and other companies, including the so-called Big Three automakers, have been signed with a minimum of rancour and threats. It could just be that there’s no villain to rally against anymore.

Q: Where did the more than 500 production jobs at EMD in London go? Did the company simply tow them to Muncie, Ind., as many thought it would, or has the work been scattered elsewhere?

Most of the work went to Muncie, while some of it was doled out to Brazil. However, a longtime EMD worker in the U.S. with knowledge of the Muncie plant said the company is experiencing difficulty there. “We have heard in the plant . . . that Muncie is having a hard time getting the product out. They’re having problems getting people to work for the company due to low pay, that some employees think the work is not worth it.”

Q: Many small London companies were suppliers to EMD. What’s become of them after a year without that business?

According to London Economic Development Corp. chief executive Peter White: “The biggest impact was on the service suppliers to the plant with the end of operations. At this point, the supply chain for manufacturing is still being supported by the London region, Ontario and international suppliers. Many of the major component supply items came from outside the London region during the operation of the plant, with steel plate from Hamilton and the U.S., rail trucks and assemblies from Europe and cabs from the U.S.”

Q: Train locomotives have been built at the EMD site for decades. In a market saturated with large, empty factories, what’s the likelihood the closed-down factory will be sold any time soon and what type of buyer might it interest?

Commercial realtor CBRE Canada didn’t immediately answer that question, but the betting line is, it’s going to be a tough sell. For one thing, $10 million isn’t chicken feed in this day of fiscal responsibility, especially in a region that has struggled economically for years. The factory also was designed for locomotive construction, and as such has a rail line running through it. A manufacturing firm with deep pockets and a long-term strategy to remain in the city would fit the bill.

Q: Caterpillar auctioned off what was left inside the London factory and has the plant up for sale. How much is the city losing on annual property taxes?

According to realty firm CBRE, which is listing the property for $9.9 million, annual property taxes are $403,000. That’s enough to buy one new city bus every year.

Q: Progress Rail chief executive William Ainsworth was publicly silent during the EMD standoff, even refusing daily Free Press calls for comment that went on for weeks. What, if anything, has he said publicly since about the company’s London withdrawal?

Ainsworth steadfastly said nothing to the media throughout the dispute, nor did he conduct many news briefings after the plant closed. However, in an April Wall Street Journal article, he was enthusiastic about the capabilities of the Muncie plant. “I believe this will be the most efficient locomotive manufacturing plant in the world,” he said.

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Edward Taylor’s kids were three and five when he was told he had lost his job after almost seven years with EMD.

He knew it could happen, he said, but figured the dire warnings coming from both the union and the company were more posturing than reality.

“You hear one thing from one side and another from the other, but you figure they’re still negotiating,” he said. “It’s like the NHL lockout — you hear a lot of things, but they’re probably still negotiating. At the time, I really didn’t think they’d close the plant. You heard that they might, but you thought they’d come to some sort of agreement.”

Taylor had earlier made a shrewd career move that ensured him a future when the company sunk.

“I had been a train tester, but when the apprenticeship (electrician) position became available, I said, ‘you know what? I can be an electrician anywhere, but you can’t test trains anywhere.’ There are maybe 400 train testers in the entire world.”

Like Taylor, most of the electricians and millwrights have found jobs since the plant closed.

“They may be working their second job since then, but they’re working.”

Taylor even branched out to part-time teaching at Fanshawe College.

“I’m one of the lucky ones. I found something. But starting over sucks. I finally got three days off in a row just now. You start a new job and you’re the low man on the totem pole. You haven’t built up any vacation time because you haven’t been there a year. You’ve been working at the last place for seven years and you’re thinking I only have 21 more before I retire. Now I have another 30 to go before I retire, but that’s just how it is.”

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TIMELINE

August 2010

Electro-Motive Diesel (EMD) in London bought by U.S.-based Caterpillar Inc., through its Progress Rail Services division.

May 25, 2011

More than 600 workers at EMD in London fear they’ll be locked out, Canadian Auto Workers officials say.

The rail locomotive manufacturer is in talks with the CAW on a new collective agreement, but the two sides remain far apart and a company statement identifies a June 1 deadline, not enough time to bridge the gap.

May 30, 2011

The company and its unionized workers continue talks.

Fearing the employees could be locked out, CAW Local 27 and the company reach a tentative deal to extend the deadline for talks to Dec. 31.

Dec. 28, 2011

Workers reject a final offer that would slash wages by more than half.

Jan. 1, 2012

Workers are locked out after contract talks bog down.

Jan. 10, 2012

Muncie, Ind., Mayor Dennis Tyler — his city home to another Progress Rail operation, where London workers fear their jobs will be towed — says he sympathizes with the EMD workers, but he’ll gladly take the jobs if Caterpillar wants to move them.

Jan. 21, 2012

A large pro-labour rally in Victoria Park garners national attention not only for the plight of EMD workers, but also for Mayor Joe Fontana’s challenge to Prime Minister Stephen Harper to “get your ass“ to the city to end the lockout.

Jan. 26, 2012

Caterpillar reports record profits of US$378 million for 2011.

Feb. 3, 2012

Caterpillar locks the doors in London for good — one day before a Progress Rail hiring blitz in Muncie.

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BY THE NUMBERS

465: Locked-out unionized EMD workers who lost their jobs

200: Non-unionized workers who lost their jobs

34: Days lockout lasted

61: Years plant operated

$38M: Cost to close plant

4,000: Job seekers at Muncie, Ind. job fair as EMD moved the work there

9%: London unemployment rate the day of the announcement

8.5%: City’s jobless rate now

17: Months between Caterpillar buying the London plant and shutting it